Ann Francke, chief executive of the Chartered Management Institute, said: “It should be a real cause for concern that the UK’s… More

BBC Dragon calls for children to 'learn to earn' their pocket money

Thursday, 11 February 2016

Sarah Willingham, consumer champion, mum of four and BBC Dragon has today called for British parents to rethink how they give pocket money to their children, having learnt that 85% of British children do not always have to earn money (by for example doing chores) that they receive from their parents.

Research by Experian has revealed that most (58%) parents are trying to take an active role teaching their children how to manage money well. Encouragingly over half (51%) of parents who give pocket money do so to help their children learn how to manage money independently. However, their good intentions are being undermined by a number of factors.

67% do not take a consistent approach in ensuring their children earn their pocket money
42% of those surveyed (parents of children aged between 5-18years) admitted they were not taking as active a role as they would like
Of these parents, 36% struggled to find the time to take a more active role
A further 30% cite a lack of confidence, knowledge or suitable resources as factors that are holding them back.

Many (37%) British parents remain concerned about their child’s ability to manage their money when they become financially independent.

Commenting on the research Sarah Willingham said: “It’s clear that despite our best intentions as parents, long term we’re not doing our kids any favours by just giving them pocket money, rather than giving them the chance to earn it. Pocket money is often the first experience children have of managing money, and I’d like us, as parents, to take a more active role in teaching our kids the importance of earning their pocket money and saving for the things they’d like.

“Good financial sense is an essential life skill in the same way as learning to swim or ride a bike. If kids take an active role in family life and are encouraged to take part in activities to earn their pocket money rewards, they’ll not only build up their financial savvy but also their self-confidence and a brilliant feeling of achievement. There are all sorts of ways kids can earn their pocket money, from washing the car to walking dogs – whatever works for you as a family. But the point is that pocket money should be earned not expected.”

The Experian study exploring children’s attitudes, behaviours and influences relating to money has also revealed some concerning pocket money habits which could be setting unrealistic expectations amongst younger generations.

One in ten (10%) of those who give their child pocket money say they give it as and when the child asks for it. These children somewhat unsurprisingly receive the largest allowance over the month - £54.31 v £34.97*1 (those who receive it weekly) or £39.66 (those who receive it monthly.)

47% of parents decide how much to give their children simply based on how much they can afford as a family; a further 29% based the amount on the child’s age and 26% decide based on their child’s financial need.

Overall, across all the age groups surveyed, parents say their children have a greater appreciation of the value of money that they have earned. Interestingly, however, 15-18 year olds that still receive pocket money are the least likely of any age-group to always have to earn that money– and almost a quarter (23% ) never have to earn their pocket money.

In fact, a fifth (20%) of parents of 15-18 year olds, those closest to the brink of financial independence, say they are not confident their child has a good appreciation of even the value of money.

Sarah continues: “It’s absolutely crucial that we equip our kids with the tools they need to understand and manage their money later in life, and that we start early whilst their feelings and expectations around money are being set. It’s clear that kids’ attitudes towards money are shaped at a much younger age than we think, so we need to start the process of talking about money at home as early as possible.”

Financial Education
When looking at the greatest influences that could affect a child’s attitude and behaviours with money, 68% of parents ranked themselves as having the greatest influence. This was followed by the child’s peers (44%) and television (25%).

Teachers didn’t even feature in the top 5 and in fact ware ranked lower than celebrities at 10% V’s 14%.

In spite of this, the vast majority (61%) felt that their child could receive more support about how to manage money well in the classroom; including a quarter who believe they could receive a lot more support.

Currently, only 22% of all those surveyed had any knowledge of their child being taught any form of financial education in school.

Clive Lawson, Managing Director at Experian, commented: “My children’s financial future and happiness is never far from my mind but I’ll equally hold my hand up to not always being able to find the time to really invest in helping them learn the money management lessons I wish I had learnt sooner in life. There are so many rites of passage that young adults should experience as they become independent, but struggling to manage unaffordable debt does not need to be one of them.”

Recognising the importance of helping children learn essential money management skills early in life, Experian and Sarah Willingham have partnered to develop Jangle, a free app which has been quality marked by pfeg (part of Young Enterprise). Jangle is for children aged 7 -11 and is a fun and easy way to help teach children essential skills about how to manage money well while helping them save for the things they want. Jangle is non commercial.

Lawson continued; “I learnt recently that behaviours and attitudes towards money can be set from as early as seven*2, which really surprised me. It’s also one of the reasons I’m so happy to have had the opportunity to work with Sarah to develop Jangle, a great new and free app that teaches children money skills while helping them save.”

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